Doubling Business Tax Favored By Whitehall Twp. Executive

June 01, 1985|by JODI DUCKETT, The Morning Call

Whitehall Township Executive Michael Harakal, continuing his efforts to get the business community to pay a greater share of rising township costs, has called for a public referendum aimed at doubling the business privilege tax.

An ordinance to be reviewed by the commissioners June 10 would authorize a ballot question asking voters to approve a home rule charter change increasing the allowable business tax levy from 3/4 of a mill of gross sales to 1 1/2 mills.

Whitehall currently levies a tax of 3/4 -mill on the gross sales of retail businesses and 1/2 -mill on the gross sales of wholesale businesses.

"I don't think it's fair for the residential property owner to sustain increased taxes on an annual basis when we are capable of generating funds from those who use the services," Harakal said yesterday.

"I see the business privilege tax more as a users' tax than a personal income or real estate tax," he said. He said that businessescreate the need for extra services, such as police and lighting, and are responsible for growing road maintenance costs.

Harakal said his suggestion to raise the business tax also was spurred by the fact that the township could lose up to a quarter of a million dollars as a result of pending real estate tax assessment appeals by several of the township's major businesses, including the malls.

Harakal said the change in the charter would not necessarily mean an increase in business taxes, "but we would like to have that option available to us."

Harakal's views appeared to be supported by a majority of commissioners contacted last night.

"We definitely need revenue, and I think the property owners have been taxed enough," said Michael Galomb. "I think the business people are in a better position to pay than the homeowners."

Commissioner Dale Flores, noting the burden that businesses place on township services, said, "I would say we have to pick up a little more from our businesses than from our residents."

The commissioners emphasized, however, that, although they favored the concept of taxing the businesses, they had not yet reviewed Harakal's specific proposal.

Harakal set the stage for his proposal in his 1985 budget message, in which he expressed regret "that we must resort to increases in property taxes for extra income." Harakal's proposed 2-mill hike was reduced to 1 mill by the commissioners.

In his annual report a few months later, the executive said he had his eyes on the business community to generate income.

In the report, Harakal pointed to the passage of a state law affirming a home rule municipality's right to raise taxes above the limits imposed by the Local Tax Enabling Act and said, "Any attempt to exceed those limits should be directed towards our business privilege tax."

The township's earned income tax and per capita tax levies are below the maximum limits set in the home rule charter, but Harakal said he did not want to raise those taxes.

The proposal to increase the business privilege tax follows a number of other financial changes made in the past year in an effort to raise more revenue from businesses.

Last July, a yearlong debate over how to get transient merchants to pay their fair share of taxes ended when the board approved a licensing fee of $10 plus a 1 1/2 -mill levy on the inventory a merchant intends to sell, up to $200. Before that, transient businesses paid only a flat $25 fee.

In November, Whitehall voters approved a referendum to eliminate the $50 exemption on business privilege taxes.

The elimination of the exemption forced businesses to begin paying taxes on their entire gross income. Before that, businesses did not pay taxes on the first $67,000 in gross income.

In December, the commissioners approved a $15 increase in the longstanding $5 annual business privilege license fee. Harakal had proposed a $25 fee.

Earlier this year Harakal, faced with proposals for a number of large commercial and residential developments, asked the commissioners to consider a law requiring commercial, residential and industrial developers to pay a preset amount for road improvements.

A number of commissioners, however, were unreceptive to the proposal, expressing concern that increasing costs would chase away developers.

However, Harakal said last night the issue is not dead and the administration is gathering information to justify enacting such a law.